Abstract
This paper presents the integration of principal component analysis (PCA) and adaptive network-based fuzzy inference system (ANFIS) to assess the impact of bad loans on technical efficiency of banks. Bad loans or non-performing loans (NPLs) include past due loans, bankrupt and quasi-bankrupt assets and doubtful assets. Bad loans are considered as a bad output for calculation of the technical efficiency through PCA. ANFIS is used to model the relationship between bad loans and technical efficiency. ANFIS modeling is used to capture the nonlinearity and fuzziness existed in the modeling environment. In the ANFIS model, technical efficiency is considered as the output which is modeled with respect to bad loans, profit and costs. The results of the proposed model are illustrated through a case study in Iranian governmental banks. It is evidenced that the effects of bad loans on technical efficiency of banks are not linear but a nonlinear negative impact.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
